Educomp gets shareholders' nod for Shantanu Prakash's reappointment

Proposal to increase investment limit in Educomp Infrastructure & School Management Limited up to Rs 5,000 cr was also approved

Education services company Educomp Solutions got a nod from its shareholders to reappoint Shantanu Prakash for a period of three years from August 1, 2014 as the managing director of the company.

According to the results of the postal ballot that the company shared on the Bombay Stock Exchange. Prakash's reappointment on a remuneration of Rs 1.5 crore also got shareholder's nod.

The proposal to increase the investment limit in Educomp Infrastructure & School Management Limited, a subsidiary of the company, up to Rs 5000 crores was also approved by shareholders. Apart from this, the appointment of VK Dandona as Whole Time Director of the company also got the shareholders' nod.

Meanwhile, Stakeholders Empowerment Services (SES), a corporate governance research and advisory firm in its proxy advisory report had said that shareholders must vote against the resolutions to reappointment of Prakash and increasing investment limit in its subsidiary.

"The Company proposes to increase the investment limits in EISML by 100 per cent from Rs 2,500 Crore to Rs 5,000 Crore to fulfill its obligations as defined in the CDR agreement with the CDR lenders. However, no disclosure is made to justify a 100 per cent increase in investment limit when the current limit is underutilised. The shareholders are in dark regarding the current or planned usage of the amount equivalent to the Investment limit. Therefore, SES recommends shareholders to vote AGAINST the resolution," said SES in its report.

The company posted a third quarter net loss of Rs 87.6 crore for the period ended December 31, 2013 compared to net profit of Rs 8.01 crore for the same period last year.

Educomp's net sales fell to Rs 155.33 crore for Q3 FY14, down by 37 per cent compared to Rs 271.12 crore for three-months ended December 31, 2012. Sequentially too, there was a 3.7 per cent drop in net sales for December quarter compared to the September quarter.

Shantanu Prakash, CMD, Educomp Solutions had earlier told Business Standard that they are hopeful that FY15 will ease a lot of the current pain in the system and with a new government in place in mid 2014, the economy as a whole and education sector in particular will get a fillip.

In 2013, Educomp made two exits in what it calls non-core segments. Earlier this year, the company sold its entire 50 per cent stake in the vocational training firm IndiaCan, to its joint venture partner Pearson.

In March last year, they completed the sale of 50 per cent stake in Eurokids International Limited to a group of investors led by GPE India. The company had said it made a profit of Rs 70 crore on this investment, and that the proceeds would be used for its core businesses.

Yesterday, Educomp Solutions said that it has got an approval for debt restructuring by the Corporate Debt Restructuring (CDR) Empowered Group.